We look at the situation in the island nation where depositors' money is at
risk.

Cyprus banks reopened on Thursday after being shut for nearly a fortnight, with tight controls imposed in a bid to stop a bank run as the island's leaders negotiated a €10bn (£8.5bn) bailout package with the European Union.

Savers in Cyprus with more than €100,000 in the top two banks – Bank of Cyprus and Laiki or "Popular Bank" – face losing a large amount of their money. There are as many questions as answers, particularly surrounding the imposition of capital controls, but here we address a few pressing issues and put readers' questions to the experts.

Can I take my money out of Cyprus?

Cyprus has unveiled strict measures to stop capital flooding out of the country. Credit and debit card use abroad will be limited to €5,000 a month and people leaving Cyprus can only take €3,000 with them. Cashing cheques will be banned, although Cypriots will be able to deposit them in their accounts. Cash withdrawals will be limited to €300 a day. There will be no early withdrawals allowed on agreed fixed-period savings accounts.

It has been reported that these controls, which came into effect on Thursday, may not apply to all banks. They are due to expire after seven days, but may be extended if it is considered necessary. The European Commission said it will "continue monitoring the need to extend the validity of or revise the measures".

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I work mainly in Luxembourg, where I have £50,000 in a sterling savings account and €15,000 in another account. Is the sterling safe there? Should I convert the euros to sterling? Or transfer it all back to the UK while I still can?

Mark Bodega of currency firm HiFX said: "Like Cyprus, one could argue that Luxembourg is a small country with a seriously oversized bank sector. The wealthiest country in the EU and second smallest, Luxembourg's banking sector exceeds its GDP by a whopping factor of 23.

"The big difference, of course, is that these are not Luxembourg banks, but subsidiaries of the European and US banking giants, with Germany and France to the fore."

He said bank guarantees in Luxembourg have risen from €20,000 to €120,000, so sterling and euros should be covered by the EU Deposit Guarantee Scheme.

If you remain concerned, you could bring some money back to the UK, or alternatively reduce the amount held in the accounts over time.

Mr Bodega said: "If repatriating funds to the UK, don't forget to compare the exchange rates offered by your bank to those of one of the many currency brokers, as you'll save up to four per cent. This might not sound a lot but four per cent of €100,000 is €4,000 so well worth it."

Is my money safe elsewhere in Europe?

Some fear that events in Cyprus have changed things throughout Europe, by breaking the taboo on imposing losses on ordinary savers. This wasn't helped by comments from senior eurozone minister Jeroen Dijsselbloem, who said the heavy losses inflicted on depositors in Cyprus could be the template for dealing with future banking crises across Europe.

"If the bank can't do it [rescue itself], then we'll talk to the shareholders and the bondholders, we'll ask them to contribute in recapitalising the bank, and if necessary the uninsured deposit holders," he said, referring to savers with more than the €100,000 protected under the EU's deposit protection laws.

Mr Bodega said the situation in Cyprus had worried clients in some other eurozone countries.

"We haven't had any calls from France or Germany – it's Italy, Greece, Spain and Portugal where people are getting spooked and looking at the alternatives," he said.

More than 60pc of respondents to a HiFX survey said the situation in Cyprus had made them more nervous about holding money in overseas bank accounts.

"Those above the €100,000 threshold are either looking to set up an offshore bank account with a UK bank or looking to bring back enough funds to the UK to keep them below the threshold. Some are also considering setting up multiple accounts," said Mr Bodega.

"We are also seeing clients in the UK hold money here rather than send it abroad and using a forward contract to fix the rate."

However, experts believe the situation in Cyprus will have discouraged other countries from using the method of targeting bank deposits to raise revenue through levies.

"I think having seen what happened in Cyprus, it won't be a first option. But it highlights the fact people should think about their assets, and banks are probably not seen as the safe option they were in the past," said Mr Girvan.

Is my money safe with the UK operations of Cypriot banks?

The Bank of Cyprus has a UK offshoot with around 50,000 savers holding £910m and has operated here for more than half a century. Last year the bank joined Britain's savings protection system, the Financial Services Compensation scheme, which covers savings up to £85,000. Bank of Cyprus UK said the crisis in Cyprus would have no effect on its deposits.

Laiki Bank UK is not covered by Britain's compensation scheme, unlike Bank of Cyprus. It said deposits would be guaranteed at least up to £85,000, but it is not clear whether customers with more than £85,000 in their Laiki UK accounts will lose some of their savings.

How does the UK savings compensation scheme work?

The FSCS offers £85,000 compensation per person, per bank. But savers should closely follow the rules, depositing no more than £85,000 with any one banking group. Watch out for shared licences. For instance, Halifax and Saga both operate under a Bank of Scotland licence so cover is £85,000 in total. Savers are advised to spread money more widely. Find out more at fsa.gov.uk/consumerinformation/compensation/brands.

Will the British Government compensate me for lost funds?

After the Icelandic banking system collapsed in October 2008, the British Government decided to compensate almost all customers who had lost money even beyond the insured limit. About 230,000 savers recuperated the full savings – about £3.5bn.

Rob Burgeman of Brewin Dolphin, which offers financial advice to wealthy individuals, said depositors should consider the financial strength of any bank they entrusted large sums to. "If a bank pays a better rate of interest, it's because it has to pay more to attract capital," he said. "A stronger bank can afford to pay less."

My husband and I have €200,000 in our lawyer's Bank of Cyprus account, combined with money from other clients. Will our money be treated separately or will the account be taxed as a whole?

Callum Girvan of wealth management firm Blevins Franks said "common sense" would dictate that the assets of different clients would be treated separately, but he said there was "no way to know at the moment what will happen".